Update on the Ohio REO property management case (OR: April 2010)

By Lorie Garland
Asst. Vice President, OAR Legal Services

The February Ohio REALTOR included an article discussing the Ohio Real Estate Commission’s (OREC) revocation of a real estate agent’s license for failure to properly handle the management of listed REO properties. At the time that article was written, the agent had filed a motion for reconsideration with the OREC. The OREC has recently considered this motion. (To view the February article, click here.)

In this case, the agent entered into listing/management agreements with three asset management companies. The agreements required the agent to perform general maintenance duties on the properties. The agent hired a contractor to perform those duties.

The agent did not have a written agreement with the contractor.

The asset management companies paid the agent directly for the property management services. These checks were made out to the agent and deposited in the agent’s personal bank account. The agent then paid the contractor.

The contractor was not paid for some of the maintenance work he performed on the properties and sued for the money he was owed. The contractor prevailed in the litigation and was awarded a judgment in the amount he was owed, plus interest. The contractor also filed a complaint with the Division of Real Estate and Professional Licensing (Division). At the time the agent’s conduct was under investigation by the Division, the agent had paid the principal amount of the judgment, but not the interest.

Upon investigation of the complaint, the Division charged the agent with five counts of violation of the license law provisions. The agent was charged with the following:
Acting like a broker without a broker’s license;

Misconduct for collecting money for performing property management services in his own name instead of the brokerage name;

Misconduct for failing to have a written maintenance agreement with the contractor;

Failure to exercise reasonable skill and care in his duties to the asset management companies by failing to have a written maintenance agreement with the contractor; and

Having an unsatisfied judgment against him for the maintenance work performed by the contractor.

The OREC found a violation on all five counts. The penalty assessed was revocation of the agent’s license on counts 1, 2, 4, and 5 and a civil penalty of $2,500 on counts 3 and 4.

The agent filed a motion for reconsideration of the order with the OREC. Upon reconsideration, the OREC modified the order but only with respect to the penalty assessed for the count 5 violation. Instead of revocation of the agent’s license for the contractor’s unsatisfied judgment, the OREC instead assessed a penalty of $1,500. The agent has now appealed the OREC order to the Court of Common Pleas.